Understanding Your Credit Score 101

A credit score and a credit report are NOT the same thing. A credit report is like a history book showing details on each of your accounts, like balances, collections, and on-time payments broken down by month. A credit score is more like a grade based on selected information from your report.

There are different credit scoring models/rubrics but the two main scores are: the FICO score and the Vantage Score.

The FICO Score (pictured above):

Payment History (35%) - whether or not you pay your bills on time

Amounts Owed (30%) - how much of your available credit you are using; should remain below 30% of credit limits

Length of Credit History (15%) - how long your credit accounts have been established and how recently they have been used

Credit Mix (10%) - mix of ‘types’ of credit (credit cards, retail accounts, installment loans)

New Credit (10%) - how many times you have applied for new lines of credit in the last 12 months

The Vantage Score (pictured below):

Some older models of the Vantage Score used percentages (like the FICO breakdown above), however the VantageScore 4.0 describes credit factors in terms of influence.

The picture on the left is a broad representation of these levels of influence based on those descriptors.

Total Credit Usage, Balance and Available Credit - Extremely Influential - keep balances (utilization) under 30%

Credit Mix and Experience - Highly Influential - maintain a mix of different ‘types’ of lines of credit

Payment History - Moderately Influential - pay ALL bills ON TIME

Age of Credit History - Less Influential - Credit cards in good standing for longer periods of time

New Accounts - Less Influential - too many new lines of credit opened in a short time

These descriptions are simplified explanations to help you understand your credit scores.

Both scores range from 300 (Very Poor) to 850 (Excellent) with slight variations in how the numeric scores within this range translates to credit worthiness.

However, a score of at least 670 (for FICO) and 700 (for VantageScore) will generally qualify as having good credit.

Check out my post on Building Credit Without Drowning in Debt for some extra tips!

Do you know your score? Click the Credit Karma link below to check your scores.

As an independent, licensed representative of Primerica Life, I can provide a complimentary, personal, confidential analysis of your financial situation using our Financial Needs Analysis tool. Schedule your appointment now. **Appointments will be held via Zoom.

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